Question

You take out a mortgage in the amount of $300,000 at 4.2% interest rate. Payments are to be made at the end of each month for thirty years. How much of the first loan payment is interest?

$1,050
		$1,467
		$12,600
		$17,773

Answer 1

$ 1,050

Working:

Step-1:Calculation of monthly payment
Monthly Payment		=-pmt(rate,nper,pv,fv)
		= $1,467.05
Where,
rate	=	4.2%/12	=	0.0035
nper	=	30*12	=	360
pv			=	$3,00,000
fv			=	0
Step-2:Loan amortization schedule
Month End	Beginning value of loan	Monthly payment	Interest	Reduction of principal	Ending Loan
	a	b	c=a*4.2%*1/12	d=b-c	e=a-d
1	$3,00,000.00	$1,467.05	$1,050.00	$417.05	$2,99,582.95